Posted in: WWE WWE Stock Report for the Week Ending 8/3/2012
By Mr. Tito
Aug 3, 2012 - 9:35:22 PM
Disclaimer: The following prepared report, using sources and data believed to be accurate and reliable, is for entertainment purposes only. Information and/or opinions expressed by the author are does not constitute a solicitation or an offer to buy or sell any security. Readers of this report are to buy or sell securities at their own risk. This report is prepared exclusively for LordsofPain.net/WrestlingHeadlines.com.
Main Stock Indexes - Week End Closes
-Dow Jones Industrial Average: 13,096.17 (up +0.16%)
-NASDAQ: 2,967.90 (up +0.33%)
-S&P 500: 1,390.99 (up +0.36%)
Economy and WWE Stock Analysis: For the past few months of this report, it was discussed how strong the Wrestlemania 28 (record gate in Miami, Rock vs. John Cena, Triple H vs. Undertaker rematch) and Extreme Rules 2012 (John Cena vs. Brock Lesnar) performed versus the same shows in 2011 and how this could present stronger Pay Per View revenues than last year during the 2nd quarter. By that token, the numbers are and the WWE did $40.8 million during the 2nd Quarter 2012 versus $34.4 million during the same quarter in 2011, a 17% increase. Thus, this report was correct on THAT prediction.
But unexpectedly, the WWE Merchandise (or as they call it, "Consumer Products") took a hit. The report blames a lack of WWE All-Stars video game franchise for 2012 compared to 2011, but live event merchandise sales were down slightly. Interesting to note is that the WWE attendance is down but the WWE made up the difference in lost attendance by higher ticket prices (probably on the lower level seats). In all probability, higher ticket sales combined with a 2nd quarter that started with surging gasoline prices, may have depressed the WWE fanbase's purchasing power to buy more WWE products. If my suggestion about higher energy prices is correct, merchandise sales could be rough through the 3rd quarter. Investors appeared lukewarm at the inner workings of the 2nd Quarter 2012 results and thus not much movement on the stock until Friday. WWE Studios and International sales were also down...
During the WWE Conference Call, however, Vince McMahon did suggest that an announcement regarding the WWE Network would come sometime during next quarter (October, November, December). WWE does have some increased expenses, both in equipment and administrative costs, in preparing for this WWE Network launch. It's great to finally hear some certainty from an actual WWE official instead of hearing leaks from the WWE offices and/or locker room about the Network's launching problems. If merchandise begins to see a serious slowdown, something like a WWE Network is desperately needed to offset that revenue stream decline. However, one would think that if a fan is buying less WWE merchandise, why would they invest in a higher cable bill?
Difficult week to assess in the overall stock markets... The crack addicts in the Stock Market who just LOVE cheap Federal Reserve printed money didn't hear what they wanted in the Federal Reserve statements posted on Wednesday. Investors expected that the Fed would increased their securities purchasing programs at big financial institution, which is a method of funneling newly printed money into the system to cheapen credit (i.e. stimulate the economy). Nothing yet from the Fed... And then on Friday, the July 2012 Employment Situation Summary, which contains the unemployment rate and jobs added, had a boost of 163,000 jobs, above the under 100,000 many economists had. Stock markets surged on Friday after this report was posted and ended the week with some gains to offset the previous days' losses. It helped give the WWE Stock a boost in its price after the 2nd Quarter 2012 results disappointed.
Investors kept the WWE Stock under $8.00 and probably for good reason. Despite stronger Wrestlemania and Extreme Rules numbers, these were short-term spikes when long-term business model issues remain. Lack of new, innovative revenue streams, the risk of failing to launch the WWE Network, insider news that's leaking, and possibly recent shake-ups of WWE management (John Laurinaitis pretty much shoved out the Executive door) could be turning off viewers. The WWE merchandise sales at live venues should ALARM the WWE with their fans spending less of their money on WWE goods.
Provided the 2nd Quarter 2012's financial results and many downside risks that remain in the economy (look at some line items in the Employment report today, such as more unemployed with fewer in the labor force, rising Oil prices, Europe remaining fragile, etc.), the WWE stock now has some serious downside risk to it. Don't doubt that in the upcoming months, a new 52 low is achieved until the 3rd Quarter 2012 results are posted. The WWE very much needs success of the new 3 hour RAW show and for that to grow interest in the overall product to have fans demanding the WWE Network and wanting to buy more merchandise at live events. "SELL" status until the 3rd Quarter results are released or if the WWE Network news is announcer earlier rather than later.
